(SMT. NILOUFER AKBAR, AGA FOR R-1 & 2
SRI I. GOPALAKRISHNA, ADVOCATE FOR R-3,
SRI D.L.N RAO, SENIOR ADVOCATE FOR
SRI ANIRUDH ANAND, ADVOCATE FOR R-4 AND
SRI GURURAJ JOSHI, ADVOCATE FOR R-5)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
CALL FOR THE RELEVANT RECORDS WHICH ULTIMATELY
RESULTED IN ISSUING THE IMPUGNED COMMUNICATIONS
No.IADB/326 V/4682/07-08 DATED 03.07.2007 AND THE
COMMUNICATION No. CI 26 SPI 2007 DATED
03.10.2007/02.11.2007 VIDE ANNEXURES-A AND B & ETC.
THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED FOR ORDERS, COMING ON FOR
PRONOUNCEMENT THIS DAY, ORDER WAS PRONOUNCED
AS UNDER:
4. KUL further claims that the provisions of the Karnataka
5. The aforesaid dispute arises in the context of the facts as
6. One Sri B. N. Shah had applied for a grant of a mining
of twenty years from 23.12.1982 and registered on 02.02.1983.
extraction of limestone, clay, dolomite, sandstone, and gypsum. It
is the KUL's case that the said lease was held on behalf of SQCL.
7. KIADB published a Preliminary Notification on 07.06.1984
for the acquisition of the subject land. Thereafter, KIADB
Naganapura village). KIADB also acquired the area of 35 acres
under the provisions of the KIAD Act. Apparently, KIADB
8. SQCL had filed a writ petition, being W.P. No. 4892/1999,
delivery of the subject land to SQCL. The said petition was
9. KIADB allotted the Factory Land measuring 35.15 acres to
SQCL. SQCL availed of financial assistance from IDBI Limited
institutions. SQCL defaulted in servicing the loans availed from
10. In the circumstances, IDBI filed a suit before the Bombay
High Court, Mumbai (O.A. No. 3251/1993). In the said
proceedings, the Bombay High Court appointed a court receiver.
Recovery of Debts due to Banks and Financial Institutions, 1993.
The said action was numbered as O.A No.182/2002. The learned
11. In the proceedings before the DRT, the assets of SQCL
basis. The petitioner also participated in the bidding process of
the property purchased by SQCL was issued. The said certificate
"SPECIFICATION OF PROPERTY
Property admeasuring 35.15 acres Survey
Nos. 15/4, 88/1A, 88/1B, 88/2, 88/3, 88/4, 5 & 6
situated at Village Nagnapur, Post Lokapur, Taluka
Mudhol, District Bagalkot in the State of Kamataka,
as per the MOU dated 27th July 1987 of which
lease-hold rights have been renewed by the
Karnataka Industrial Area Development Board for a
period of two years from 25th May 2005 to 24th May
2007 as per their letter dated 1st December 2006,
the properties comprising of lease-hold rights,
along with structures standing thereon including
plant & machinery etc. on "as is where is" basis,
and more appropriately described in Schedule 'A,
'B' and 'C' of General Terms & Conditions of
Auction"
12. KIADB executed a lease-cum-sale agreement for the
Factory Land. Although the KUL had acquired the Factory Land
only at a public auction held on 07.05.2007, it also claimed that it
was entitled to a lease in respect of the subject land (305 acres 7
guntas). KUL sent several letters claiming that SQCL held the
leasehold rights in respect of the subject land, representing that it
was entitled to ML 1858 as a successor in interest to SQCL.
13. Following the said communications, the Department of
Mines and Geology issued an order dated 05.09.2007, restoring
ML No. 1858, the mining lease in respect of the subject land, in
favour of KUL.
14. The said order was challenged by Sri Atul B. Shah, the son
of Sri B.N. Shah (the lessee in ML1858), before the Revisional
Authority (Central Government) by filing a revision application
(Revision Application No. 13/07-2008/RC). KUL was also
impleaded and contested the proceedings. It claimed that Sri Atul
B. Shah had no locus standi to file the revision petition or
challenge the order dated 05.09.2007. It was KUL's case that the
application for the grant of the mining lease was made by SQCL
and the lease was granted to it. It claimed that Sri B. N. Shah was
a Director of the SQCL and had executed the lease on its behalf.
15. The Revisional Authority faulted the order dated
05.09.2007, which restored the mining lease ML 1858 in favour of
KUL on several grounds. First, that the area in question was a
held area, and Rule 59 of the MC Rules applied. It was noted that
the State Government had not accepted KUL as a legal
successor in respect of ML 1858. Therefore, the same could not
be restored in favour of KUL. Second, it noted that the State
Government had accepted Atul Babulal Shah as legal heir under
Rule 25A of the MC Rules, in respect of renewal of ML 1858.
Third, the Central Government found that the certificate of sale of
immovable property dated 30.05.2007 issued by the Registrar,
DRT, Pune did not make any reference to ML 1858 or the subject
land. Thus, KUL had not purchased the subject property. In the
given facts, the State Government did not have the jurisdiction to
accept the application for renewal of ML 1858 from KUL. The
Revisional Authority held that the action of the State Government
in issuing the order dated 05.09.2007 recommending renewal of
the mining lease in favour of KUL was violative of Section 19 of
the MMDR Act. In view of the above, the Revisional Authority
- 10 -
(Central Government) allowed the revision petition by an order
dated 30.11.2010 and set aside the State Government's order
recommending the restoration of ML 1858 in favour of KUL.
16. Aggrieved by the order dated 30.11.2010 passed by the
Revisional Authority (Central Government), KUL filed a writ
petition in this Court, being WP No. 9581/2011 (GM-MM-S).
However, the said petition was dismissed by an order dated
31.03.2016. This Court found: (i) that ML 1858 was never the
subject matter of sale before the DRT and the sale certificate was
confined to confirmation of sale of Factory Land to the extent of
35 acres and 15 guntas; (ii) that KUL acquired no rights in the
subject land; (iii) that KUL in the guise of sale certificate which did
not pertain to ML 1858 or the subject land had addressed
communications to various authorities to represent that it had
purchased rights in respect of ML 1858. KUL's contention that
ML1858 was granted to it was without basis and is, accordingly,
rejected; and (iv) that the mining lease, ML 1858, executed by the
government was indicative that it was in the name of Babulal
Nathuram Shah. In view of the aforesaid findings, this Court
dismissed KUL's petition (WP No.9581/2011).
- 11 -
17. KUL challenged this court's order dated 31.03.2016,
passed in WP No.9581/2011 before the Supreme court, by filing a
special leave petition (SLP(C) No.16021/2016). The Supreme
Court dismissed the said SLP by an order dated 26.08.2025.
18. In the meantime, KIADB, in a meeting held on 30.05.2007,
noted that SQCL had failed to deposit the cost of the subject land
(land to the extent of 305 acres and 7 guntas) acquired under the
KIAD Act.
19. In the meantime, five parties, including KUL and JKL had
requested for allotment of the subject land for establishment of a
cement plant. The request of the said parties was considered by
KIADB at an earlier meeting held on 30.01.2006, and it was
resolved to allot the subject land for the project approved under
the State High Level Clearance Committee (SHLCC). KIADB
noted that the project proposals of the five parties who had
requested allotment of the subject land had been cleared by
SHLCC. Accordingly, KIADB asked the said companies to submit
their final offer for allotment of the subject land.
- 12 -
20. The said parties had submitted their offers within the
period stipulated. KUL had offered `2,43,300/- per acre, which
was the lowest, and JKL had offered `3,02,000/- per acre, which
was found to be the highest amongst all offers. Since the JKL's
bid was the highest, KIADB accepted it, and the subject land was
allotted in favour of JKL by a letter dated 03.07.2007, which is
impugned in the present petition. KIADB sought approval of the
Government for the allotment of the said land. The State
Government approved the allotment of the subject land to JKL for
mining purposes.
REASONS AND CONCLUSIONS
21. As noted at the outset, the learned counsel appearing for
KUL confined the challenge to the impugned communications on
the ground that the same violated Rule 59 of the MC Rules, as
were in force at the material time. It was also argued by the
learned counsel for the petitioner that the MMDR Act and the MC
rules are a complete code and override the KIAD Act. He argued
that the subject land could be leased only under the MMDR Act,
and it was impermissible for KIADB to allot the land to JKL. He
also noted that 12 acres of land were removed from ML 1858. In
respect of this parcel of land, a Notification dated 28.03.2002 was
- 13 -
issued under Rule 59 of the MC Rules, notifying their availability
for regrant, which, according to the petitioner, was the correct
procedure to be followed. He contended that selectively not
following the said procedure in respect of the subject lands would
constitute malice in law. The learned counsel also referred to
certain decisions in support of his contentions, which would be
noted hereafter.
22. The learned counsel appearing for KIADB and JKL
countered the aforesaid submissions. They contended that the
contentions advanced are not supported by any pleadings, and
thus it was impermissible for the petitioner to pursue the same.
23. The learned counsel appearing for KIADB also submitted
that there is no cavil that before granting any mining lease, the
MMDR Act and the rules made thereunder are required to be
followed. He submitted that the KIADB had not granted any
mining rights but had merely transferred the surface rights, which
it was entitled to do. It was also contended that the petitioner is
estopped from challenging the allotment of the subject land, as it
had participated in the allotment process without reservation.
- 14 -
Having failed to offer the highest price, it commenced a series of
litigation to interdict the use of the subject land.
24. Before proceeding to address the rival submissions, it is
necessary to note that the arguments advanced before the court
are not supported by any averments made in the petition. Some
of the contentions advanced on behalf of the petitioner run
contrary to the averments made in the present petition. The
averments made in the petition indicate that petitioner had
challenged the impugned allotment on several grounds, including
that the allotment was made without following regulations made
under the KIAD Act. It is implicit that, according to the petitioner,
the KIAD Act and the regulations made thereunder were
applicable. It is expressly averred in the petition that KIADB is a
statutory body and "is required to grant land in terms of the
Regulations of Allotment framed by them". The petitioner has also
averred that "it is legally not permissible either under the
provisions of the KIAD Act or the Rules framed thereunder, to
give the land acquired for this project to any other person
overlooking the subsisting leasehold rights in favour of the
Petitioner". However, contrary to the said contentions, it is now
- 15 -
contended that the KIAD Act and the rules made thereunder are
not applicable, and that the subject land can be leased only in
accordance with the procedure under the MMDR Act. According
to the petitioner, the MMDR Act overrides KIAD Act and,
therefore, the KIAD Act is not applicable.
25. We may note that the present petition is founded on the
presumption that the petitioner had acquired the leasehold rights
in respect of the subject land by virtue of an auction of assets of
SQCL conducted by the learned DRT. The petitioner had
participated in the auction and quoted a sum of `11.3 crores for
the assets of SQCL, on the premise that it would be conveyed the
right, title and interest in respect of the Factory Land. KUL also
claims that, in addition, SQCL acquired the subject land (305
acres and 7 guntas) so as to have a seamless supply of raw
materials and, "therefore, as a consequence, the said lands are
required to be allotted in favour of the petitioner".
26. Concededly, none of the grounds on which the present
petition is founded was urged or pressed by the learned counsel
of KUL.
- 16 -
27. KUL's principal claim that it is entitled to the rights in the
subject land pursuant to being the successful purchaser of the
Factory Land was pursued by KUL before this court as well as
before the Supreme Court. But it did not prevail. This foundational
issue is concluded against KUL.
28. As noted above, the contention that the KIAD Act and the
regulations framed thereunder, including Regulation 17, were
violated has now been abandoned. It is now contended on behalf
of the petitioner that the MMDR Act and the regulations are not
complied with, and that the allotment under the KIAD Act is
impermissible. We may note that this contention is founded on the
premise that there can be no severance between the grant of
mining rights and surface rights. It was earnestly contended on
behalf of the petitioner that there can be no severance with
surface rights and mining rights, and therefore, no lease granting
surface rights could be made in favour of JKL without conferring
mining rights, and the said rights could not be conferred other
than in accordance with the MMDR Act and the MC Rules. We
may note that this contention is also inconsistent with the
averments made by KUL in the present petition. The petitioner
had expressly averred that "the 3rd respondent if he has any right
- 17 -
can only claim the compensation for surface rights as determined
by the Government in terms of the Mineral Concession Rules.
Other than fixing compensation, the 3rd respondent has no other
rights".
29. It is clear that the contentions advanced before us were not
only not supported by the pleadings but run contrary to the
averments made in the present petition. It is apparent that KUL,
having failed to establish its case right up to the Supreme Court,
now, almost nineteen years later, seeks to set up a case contrary
to that pleaded in the present petition.
30. The learned counsel appearing on behalf of KUL submits
that there is no estoppel against law and therefore, KUL is entitled
to raise questions of law at this stage. However, it is also well
settled that the exercise of the power under Article 226 of the
Constitution of India is discretionary. We do not think it would be
apposite to exercise the discretion in favour of KUL in the given
facts, where, having failed to establish its entitlement to rights in
the subject land for the past 19 years, it now seeks to change its
tack and argue contrary to it, as claimed for the past 19 years.
- 18 -
31. In view of the above, it is not necessary to address the
other questions that are raised by the learned counsel for KUL.
However, since we had heard contentions in regard to the
applicability of Rule 59 of the MC Rules, for the sake of
completeness, we consider it apposite to address the same.
32. The relevant extract of Rule 59 of the MC Rules, as
applicable at the material time, is set out below:
"59. Availability of area for regrant to be notified :-
(1) No area -
(a) which was previously held or which is being held
under a reconnaissance permit or a prospecting
licence or a mining lease ; or
(b) which has been reserved by the Government or
any local authority for any purpose other than mining ;
or
xxx xxx xxx
shall be available for grant unless -
(i) an entry to the effect that the area is available for
grant is made in the register referred to in sub-rule (2)
of rule 7D or sub-rule (2) of rule 21 or sub-rule (2) of
rule 40 as the case may be; and
(ii) the availability of the area for grant is notified in the
Official Gazette and specifying a date (being a date not
earlier than thirty days from the date of the publication
of such notification in the Official Gazette) from which
such area shall be available for grant:
xxx xxx xxx"
33. There is no dispute that the subject land was included in
ML 1858. However, it is contended on behalf of KIADB that the
respondents refer to notifying the availability of land for re-grant
- 19 -
and not for grant. According to KIADB, this is not a re-grant but a
grant made for the first time after the lands were acquired. KIADB
also contends that it has not granted mining rights but merely
leased surface rights of the subject. Therefore, there is no
violation of Rule 59 of the MC Rules. KIADB also states that
before granting any mining rights, the applicable rules framed
under the MMDR Act would require to be followed. Illustratively,
KIADB refers to the allotment of land to the extent of 12 acres in
favour of respondent No.5. After the said allotment, respondent
No. 5 had filed an application under Rule 22 (1) of the MC Rules,
as were then applicable, to the State Government. The State
Government had thereafter proceeded to issue a Notification
dated 23.03.2002 as required under Rule 59 of the MC Rules.
The mining rights were granted to respondent No.5 in respect of
12 acres after the issuance of NOC from the Karnataka State
Pollution Control Board. KIADB states that similarly, JKL would
also be required to comply with all necessary rules for securing
the mining license under the provisions of the MMDR Act and
Rules made thereunder.
34. We are inclined to agree with the contention that the
challenge on the ground of violation of Rule 59 is premature, as
- 20 -
no mining lease or rights in respect of minerals have been
granted to JKL. The State Government had acquired the subject
land under Section 28 of the KIAD Act. Thereafter, the lands were
placed at the disposal of KIADB. In terms of Section 28(8) of the
KIAD Act, the subject land was transferred to KIADB for the
purpose for which it was acquired. In the given facts, KIADB had
decided to invite offers for allotment without issuing a public
notice. Although it is averred in the present petition that the same
is not permissible and contrary to the KIAD Act, as noted above,
the said contention was not pressed. Karnataka Industrial Areas
Development Board Regulations, 1969, permit the disposal of
lands in special cases without issuing public notices. KUL
participated in the said exercise and submitted its offer; however,
this is not mentioned in the present petition. KIADB had allotted
the subject land to JKL at the price it offered. JKL acquired the
surface rights to the subject land, previously held by KIADB. As
noted herein, the petitioner had expressly averred in the present
petition that KIADB held surface rights of the subject land; thus, it
would be entitled to compensation for the same if the mining
lease was granted. However, inconsistent with this pleading, it is
contended that there can be no severance of surface rights and
- 21 -
mining rights. The learned counsel for the petitioner had strongly
relied on the decision of M/s. Burrakur Coal Company Limited
vs Union of India1, in support of the said contention. The reliance
placed on the said decision is misplaced. This is apparent from
the following extract of the said decision:
"17. Adverting to Section 13 of the Act which deals
with compensation for prospecting licences ceasing to
have effect and rights under mining leases being
acquired, it was contended that as there is no
provision for compensation in respect of the minerals
lying underground, Parliament could not be deemed to
have enacted this law for the purpose of acquiring
mines which have been worked in the past. According
to Mr Das if we have understood him right, when a
person has acquired land either as an owner or as a
lessee carrying with it the rights to win minerals and
has opened in that land mines which he worked for
sometime, there takes place a severance between the
right to the surface and right to the minerals and that
consequently such person will thereafter be holding
the minerals as a separate tenement, that is,
something apart from the land demised and this
separate tenement cannot be acquired under the
terms of the present Act or, if it can be so acquired, it
has to be specifically compensated for. Reference to
the several provisions of the Act and in particular to
those of Section 13 indicates, according to learned
counsel, the limited scope of the Act. It is difficult to
appreciate the contention that merely because the
owner or the lessee of a land had opened mines on
that land, a severance is effected between the surface
and the underground minerals. It may be that a
trespasser by adverse possession for the statutory
period can acquire rights to underground minerals. It
may also be that if that happens the surface rights
would become severed from the mineral rights as a
result of which the minerals underground would form a
1961 SCC Online SC 23
- 22 -
separate tenement. It is, however, difficult to see how
the owner or the lessee of land who has right to win
minerals can effect such a severance between the
mineral rights and surface rights by opening and
operating the mines of that land. For, even while he is
carrying on mining operations he continues to enjoy
the surface rights also. We cannot, therefore, accept
the contention that there was any severance of the
mineral rights and surface rights in either of these two
cases."
35. The Supreme Court rejected the contention that the owner
who has the right to mine minerals from the land can sever the
mineral rights from the surface rights by opening and operating
mines on that land. We may note that the Supreme Court had
made this observation in the context of a challenge to a
notification issued under Section 4 of the Coal Bearing Areas
(Acquisition and Development) Act, 1957, expressing its intention
to prospect for coal in an area approximately 5 sq. miles, which
included two collieries owned by the petitioner. The petitioner's
case was that in consequence of such notification, they were
precluded from carrying on mining operations and the State
Government was entitled to acquire mining rights.
36. It is well settled that an owner of the land does not acquire
the rights in the minerals under the said land. However, the grant
of mining rights may deprive the landowner of the right to use the
- 23 -
surface. We may also refer to Section 24A of the MMDR Act, as
was applicable at the material time. The said Section is set out
below:
"24A. Rights and liabilities of a holder of
prospecting licence or mining lease. - (1) On the
issue of a reconnaissance permit, prospecting licence
or mining lease under this Act and the rules made
thereunder, it shall be lawful for the holder of such
permit, licence or lease, his agents or his servants or
workmen to enter the lands over which such permit,
lease or licence had been granted at all times during
its currency and carry out all such reconnaissance,
prospecting or mining operations as may be
prescribed:
Provided that no person shall enter into any
building or upon an enclosed court or garden attached
to a dwelling-house (except with the consent of the
occupier thereof) without previously giving such
occupier at least seven days notice in writing of his
intention to do so.
(2) The holder of a reconnaissance permit,
prospecting licence or mining lease referred to in sub-
section (1) shall be liable to pay compensation in such
manner as may be prescribed to the occupier of the
surface of the land granted under such permit, licence
or lease for any loss or damage which is likely to arise
or has arisen from or in consequence of the
reconnaissance, mining or prospecting operations.
(3) The amount of compensation payable under
sub-section (2) shall be determined by the State
Government in the manner prescribed."
37. In terms of Sub-section (2) of Section 24A of the MMDR
Act, the holder of a mining licence was required to pay
compensation to the occupier of the surface rights. Thus, there is
a clear distinction between surface rights and rights to minerals
- 24 -
on or under the said land. Thus, a person owning surface rights is
required to be compensated if mining rights in respect of the said
land are granted to another person. The averments made in the
present petition also suggest the same.
38. As noted before, KUL had expressly pleaded that the rights
of KIADB were confined to the surface rights of the subject land.
The allotment of the subject land to JKL is for mining purposes
and, therefore, the subject land cannot be used for other
purposes, unless permitted. However, that does not mean that the
allotment of land grants mining rights to JKL.
39. In view of the above, we find no merit in the contention that
the allotment of land in favour of JKL violated Rule 59 of the MC
Rules.
40. There is also no dispute that the MMDR Act and the rules
made thereunder are a complete code for grant in respect of
mining rights. However, that does not mean that KIADB is
precluded from allotting any lands owned by it. Both enactments
- the MMDR Act and the KIAD Act - operate in different fields.
- 25 -
41. In view of the above, the present petition is unmerited and
is accordingly dismissed.
42. The pending interlocutory applications also stand disposed
of.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C.M. POONACHA)
JUDGE
AHB/KMV
